Star Alliance keen on dynamic award pricing across all member airlines

By David Flynn, June 4 2018
Star Alliance keen on dynamic award pricing across all member airlines

Star Alliance wants to see more of its members adopt dynamic pricing on seats booked using frequent flyer points or miles, with the eventual aim of opening up every seat on every flight across every member.

Rather than airlines making just a handful of seats available to purchase with a fixed number of points or miles, the dynamic award model adopts variable pricing based on the same lines as paid commercial fares: the fewer seats that are left and the closer to the date of travel that you book, the more points it will cost you.

Speaking to Australian Business Traveller on the sidelines of this week's IATA aviation summit in Sydney, Star Alliance CEO Jeffrey Goh described dynamic pricing as "a win-win for everybody."

"Generally speaking, from a customer perspective you can prove more availability for customers and a better experience (and) from an  airline perspective, clearly there are revenue options to this but also getting miles off your books, which accrue over the years as a liability."

Goh admitted that a barrier in this is that some airlines will hold back reward seat inventory, including among Star Alliance partner airlines, describing restricted redemption availability as "generally a problem within the industry, not just across the alliance."

"But almost half of our membership today offer dynamic redemption, so the question is, can we rise to the challenge of dynamic redemption across the alliance? That's certainly something we want to be investigating."

"Once you enter into that particular sphere, availability becomes much more dynamic which will then open up more inventory for this purposes. So we are aware of the issue, and this is one of the things we are looking at to see if we can implement."

"It will be a challenge because not all of (the member airlines) have that functionality today, but many of them do."

Goh also revealed that Star Alliance is looking at adding "one or more levels" above its current top-tier Gold status.

Read more: Star Alliance is considering new status tiers above Gold

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

21 Sep 2011

Total posts 65

If this happens, it will no doubt be a total loss to all frequent flyers because airlines then will have no obligation or incentive to release any reward seats. Just look at NZ's Airpoints! Worst earn/burn ratio in the industry!

Zac
Zac

Virgin Australia - Velocity Rewards

23 May 2014

Total posts 128

One of the biggest benefits of collecting points/miles is the ability to book premium class award seats at relatively good rates. Airlines set reward rates on the assumption seats would generally otherwise go unsold, and the aim of the program is to incentivise and reward frequent travel with their airline. But dynamic pricing takes this away and undermines the fundamental value of the program. Really bad idea to implement across Star - remember we have options not just in airlines but also alliances.

Qantas - Qantas Frequent Flyer

08 Jul 2016

Total posts 23

Seems they'll lol of the value of earning miles so that revenue stream will dry up. If the majority see no venue in earning miles why bother with an expensive credit card to earn the miles, why would retailers bother offering miles when they hold little value to their customers.


Considering award schemes are naive rangers for airlines they'll need to tread carefully

Qantas - Qantas Frequent Flyer

27 Nov 2017

Total posts 15

Cynical me thinks that a redemption will not consume any fewer points than today. The cheapest seat will be as it is now. However, as seats become less available on a popular flight, the points required will rise. Airline wins. Sure pax gets a seat which would otherwise be unavailable but will the $ Versus points redeemed equation stack up?

24 Dec 2013

Total posts 88

I think anything that reduces demand for award seats is good. It might mean normal people might get a chance at getting a premium award seat every now and then and not always miss out to professional point collectors that churn credit cards, etc.

RR
RR

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 65

It is ironic you have a Lufthansa image for this piece about a change to points spend rate, given the massive cut Lufthansa have recently made to their earn rate (along with a bump up in the spend rate they did earlier) This proposed dynamic pricing system will probably be yet another opportunity to devalue points further.

Last year I purchased a RTW Lufthansa ticket that used LH and Austrian, with Thai and Air NZ to get in/out of Australia. I earned 53,000 points (need 35,000 points to retain Silver). If I took the same ticket this year with their new earn system I would earn just 23,500 points - less than half, and not enough to retain Silver status. Even if I could have flown entirely on LH/Austrian/Swiss, the max points possible would have been 28,200 points. The conversion of the ticket value in Oz dollars to Euros kills it stone dead. Have just dumped Star Alliance and Miles&More, which was a pain - total change of credit cards etc. We are now with Qantas, if they do the same trick then we would have to assess if it’s even worth being loyal any more!!!

The moment KrisFlyer and Thai ROP become more like Airpoints with dynamic, 'buy any seat' pricing is the moment Oneworld frequent flyer programs (and airlines) become more attractive than Star Alliance, at least for frequent flyer earn and burn.


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